THE power of public perception was enough to bring to one of the world’s largest accountancy practices to its knees.
THE power of public perception was enough to bring to one of the world’s largest accountancy practices to its knees.
With the imminent demise of Andersen, those remaining in the industry have tried to win back public confidence before any more scalps are taken.
Late last month Australia’s peak accounting bodies, CPA Australia and the Institute of Chartered Accountants in Australia, agreed to a new internationally harmonised standard for professional independence.
Then, last week, the Professional Standards Council released a consultative paper: Model Code of Ethics Principles in a bid to provide even greater consumer confidence through an effective complaints and discipline system that could be adopted by professional organisations, including the accountancy bodies.
The new international accountancy standard was based on a standard agreed in November 2001 by the 120 nations making up the International Federation of Accountants.
The new measures incorporate a number of recommendations from the Ramsey Report on Independence of Australian Company Auditors, including the mandatory rotation of audit partners every seven years.
It imposes a two-year waiting period before a retired auditor involved in the audit of a client can become a director of that client, and also places a ban on providing non-audit services where a firm could be required to check its own work.
CPA Australia president Brian Blood said recent events in Australia and overseas would continue to provide more important lessons for the auditing and accounting profession.
“As such this new standard will be under constant review so as to ensure those lessons are appropriately reflected in our standards,” he said.
PricewaterhouseCoopers assurance and business advisory services leader Rob Ward said the new measures were a welcome addition to the new accountancy code of practise.
“By contrast, proposals by some commentators for a blanket ban on firms providing any non-audit services to audit clients are, in our view, extremely ill-advised,” Mr Ward writes in a PwC brief.
“It would undermine rather than improve audit quality, which is often strengthened by the deeper understanding that can come from the provision of certain other services.”
The ICAA has also made it clear that it would not support a wholesale ban on auditors providing any other services to their audit clients.
Allens Arthur Robinson partner and Professional Standards Council member Steven Cole believes attitudes were already beginning to change among public companies toward the role of audits.
“In many cases companies see audits as a necessary evil and try to narrow the scope of the audit,” Mr Cole said.
The new principles would serve to bring about greater transparency within auditing functions, he said.
With the imminent demise of Andersen, those remaining in the industry have tried to win back public confidence before any more scalps are taken.
Late last month Australia’s peak accounting bodies, CPA Australia and the Institute of Chartered Accountants in Australia, agreed to a new internationally harmonised standard for professional independence.
Then, last week, the Professional Standards Council released a consultative paper: Model Code of Ethics Principles in a bid to provide even greater consumer confidence through an effective complaints and discipline system that could be adopted by professional organisations, including the accountancy bodies.
The new international accountancy standard was based on a standard agreed in November 2001 by the 120 nations making up the International Federation of Accountants.
The new measures incorporate a number of recommendations from the Ramsey Report on Independence of Australian Company Auditors, including the mandatory rotation of audit partners every seven years.
It imposes a two-year waiting period before a retired auditor involved in the audit of a client can become a director of that client, and also places a ban on providing non-audit services where a firm could be required to check its own work.
CPA Australia president Brian Blood said recent events in Australia and overseas would continue to provide more important lessons for the auditing and accounting profession.
“As such this new standard will be under constant review so as to ensure those lessons are appropriately reflected in our standards,” he said.
PricewaterhouseCoopers assurance and business advisory services leader Rob Ward said the new measures were a welcome addition to the new accountancy code of practise.
“By contrast, proposals by some commentators for a blanket ban on firms providing any non-audit services to audit clients are, in our view, extremely ill-advised,” Mr Ward writes in a PwC brief.
“It would undermine rather than improve audit quality, which is often strengthened by the deeper understanding that can come from the provision of certain other services.”
The ICAA has also made it clear that it would not support a wholesale ban on auditors providing any other services to their audit clients.
Allens Arthur Robinson partner and Professional Standards Council member Steven Cole believes attitudes were already beginning to change among public companies toward the role of audits.
“In many cases companies see audits as a necessary evil and try to narrow the scope of the audit,” Mr Cole said.
The new principles would serve to bring about greater transparency within auditing functions, he said.
